State’s Pension Fund Unsure If Sandy Hurt Its Investment

The water of Sanatoga Creek rushed Monday (Oct. 29, 2012) past the Beulah Land swimming pool and toward the East High Street bridge in Sanatoga as Hurricane Sandy approached

HARRISBURG PA – “Don’t fool with Mother Nature,” an old adage goes. May not want to bet against her, either.

According to The Pennsylvania Independent online news service, betting against the likelihood of a major storm striking the northeastern United States – which is what Hurricane Sandy did this week – was among possible investment risks taken by the state’s Public School Employees Retirement System (PSERS). It’s the fund that cares for retirement monies on which employees of the Pottsgrove, Pottstown, and Spring-Ford Area school districts will someday depend.

The Independent reported Wednesday (Oct. 31, 2012) that PSERS earlier this year invested $250 million with Nephila Capital, which operates a hedge fund that covers a range of securities related to reinsurance and weather risk. The investment usually pays off if insurance companies are not hit by heavy damage claims that often follow storms; it could prove troublesome if Mother Nature turns nasty and big claim filings follow.

Official have said that insurance claims related to Sandy may run to several billion dollars. Even if they do, PSERS may escape unscathed. Its press secretary, Evelyn Tatkovski, told The Independent “early indications are that the fund’s reinvestment investments did not incur material losses.”

“This storm’s losses may only impact a small portion of the total reinsurance portfolio,” Tatkovski added, “but … it is too soon to tell what the exact impact may be until the actual losses, including the type of losses … are determined.”